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Why Apple Should Replace Google as the Default Search Engine on iPhone with Yahoo!

Yesterday, it was announced that Apple would no longer offer YouTube on its home screen of the iPhone when iOS 6 is released next month.

That’s big news.

Apple is now replacing two-thirds of the default Google services on its home screen within a couple of months. This will significantly lessen revenues for YouTube and Google Maps as many market share reports indicate that the Safari browser accounts for two-thirds of mobile web browsing. (Some will claim that that Google never ran ads on the YouTube app so it’s no biggie in terms of revenue. Yet, the icon surely led to enormous traffic which does give Google user data to better target other ads and which was enormously important for the service’s market share and views which it touts to land more advertisers.)

While people debate whether Google was the one who decided to renew the license to Apple (why would they?) or whether or not this is such a bad move for Google in the long-term (it is), let’s focus on the next shoe to drop: Google as the default search engine on the iPhone.

He lays out that it’s a matter of time before Apple switches out Google search in the iPhone. Don’t forget they’ve already replaced Google search with Baidu (BIDU) search in mainland China. And I agree with him that Apple will eventually drop Google search in the rest of the world.

So — to be clear — why should Apple swap out Google search? Because it will financially hurt its chief mobile rival — Google — which, according to TechCrunch had to pay Apple $1 billion for referral traffic last year.

What then has been holding Apple up?

As Siegler says, I agree that Apple has failed to do this yet because of a concern about poor user experience. They didn’t dump Google Maps until they had what they felt was a more compelling offering (that they grew themselves).

Siegler makes the case that it’s now seriously time for Apple to look again at opting for Micrsoft’s (MSFT) Bing search engine as the iPhone default.

This is an option that does make sense. Remember there was some talk about Apple potentially striking a deal with Bing (I think it was for iPhone 4). In the end, Apple decided to keep Google as the default, probably because it believed that Bing wasn’t ready for prime time.

But here’s an idea for Apple consider: they should use Yahoo! (YHOO) as the default search engine on the iPhone instead of Bing or Google.

Why?

Number one, Yahoo! isn’t in a competitive position in mobile with Apple like Google and Microsoft are.

Number two, Yahoo!’s search — by which I mean its Axis product which has been out for only a couple of months — is good enough and will likely get significantly better in the next year under new Yahoo! CEO Marissa Mayer.

Let’s discuss in more detail.

Yahoo! is already the default data source for the iPhone stocks apps and Weather. More importantly, they released a new mobile search engine a few months ago called Axis under the direction of Shashi Seth. Axis is really, really good. You can use it directly as a smart phone or tablet app or as an add-on to any PC-based browser. The results are fantastic and especially interesting with a more visual component for mobile searches.

But wait… how can Yahoo! be a search provider to Apple because didn’t Yahoo! outsource search to Microsoft? Yes, in 2009, under the direction of then CEO Carol Bartz, they did outsource all the backend search and lost most of their search talent to Redmond. However, it’s only been implemented in North America so far, and just recently began to be implemented for Yahoo searches in Europe (it isn’t clear that this transition has started). If you search in Asia on Yahoo, you’re still getting Yahoo results generated by Yahoo.

The Bartz-Ballmer deal has been a bust for Yahoo! shareholders. It should be cancelled — or have the terms significantly changed to benefit Yahoo.

With the hiring of Marissa Mayer as Yahoo!’s new CEO, there’s a strong chance that she will be interested in taking back control of search from Microsoft. Why? She knows search cold, from her years at Google. It probably would give her great satisfaction to stick it to Google in search after she was left of Larry Page’s Executive Team last year — and nothing would stick it to them like having Apple choose them as their default search provider on the iPhone.

Notice how various reports have emerged over the last few weeks about how happy Shashi Seth is with the arrival of Mayer. This is because his projects are likely all now getting the big green-light — including Axis.

Also notice how David Filo has been playing a bigger role at Yahoo in the last few weeks — including getting a big feature in the press release welcoming Mayer to Yahoo! He supposedly will now report directly to Mayer according to Kara Swisher’s reporting. Filo played a big role on Project Panama, Yahoo!’s attempt to revive its search engine prior to the Bartz decision to outsource it all to Microsoft.

Could Yahoo! win at search? Certainly. They might do a straight up cancellation of the Bing partnership and begin building up a new search team that would do search in a new way building on what they have in Axis. But another possibility is that Ballmer simply throws in the towel on Bing (or Online Services Division as a whole). It’s been a sinkhole for almost 20 years. Why not sell back (give back) Bing to Yahoo! in exchange for a revenue share going forward and a cross-licensing of the patents continuing? It would still be hurting Google. If Yahoo! can get the ball across the goal line with Apple’s help, why not? Let Marissa at it.

All in all, Yahoo! should be working towards a goal of replacing Google as the default search engine on the iPhone for the 2013 release date — with or without Microsoft’s support.

Why would Apple pick Yahoo! over Bing at that time? Because:

1. Yahoo! doesn’t compete with Apple in mobile;

2. Yahoo!’s Axis search is ‘good enough’ and;

3. Mayer and Seth have a year to prove to them that iPhone users will have a much better user experience with them over Bing or Google.

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Comments

Apple appears to be an innovative company but it really isn’t – they are an advertising firm that has marketed their products brilliantly (look at Movies, TV shows and advertisements, etc). Before you Apple fanatics get upset – do a little research into Xerox way back in the 70′s to see that it was Xerox who invented a great deal of what apple uses. So now, Apple wants to protect their market share and what better way then to hold hostage the un-informed public. FU apple – Samsung does it better and cheaper

Yahoo seems to have great difficulty maintaining functionality on their sites. I can’t speak for their search function since I don’t use it. But I have become extremely frustrated with yahoo finance which may or may not work correctly throughout the day. I hope the new CEO can make some improvements or I for one will be looking for another site. As an investor with a big investment in Aapl, I hope they move cautiously if they’re thinking of using anything yahoo….

The reason Apple chose Baidu in China is because the Chinese Govt. censors search results of Google. Yahoo would hurt Apple as their brand(yahoo) is low rent. All you have to do is look at the “news” stories they chose to write.

If Apple ditches Google Search that would be plain hubris on Apple’s part. Let’s make it clear: while Apple is still the king in uniting consumer hardware with OS, Apple is inept in social aspect (Ping anyone?) and perennially weaker than competitors in online servies that involve syncing (disastrous iDisk, FaceTime weaker than Skype, iCloud inadequate compared to Dropbox or even Google Drive). While analysts and bloggers tout $1000 share price for Apple, they fail to see the obvious: the past success is no guarantee of future domination. Lately, Apple got complacent, greedier, and slower. Apple sits on over $100 billion cash but spends less on R&D (less than 3%) than most its competitors. Throwing out Google all together out of iOS will not hurt so much Google as it will hurt Apple.

your article assumes there is nothing gained by Yahoo! by partnering with MSFT. Does MSFT really bring zero to the table? That would be inconsistent with the fact Yahoo! made the deal with MSFT in the first place.

Apple can only lead the pack for so long. They wont hit 1 Trillion valuation no time soon, if ever. IF Oracle n Microsoft didn’t brake it, I doubt an Ad/Software/Hardware Hybrid cult company would. Its amazing how you trivialize Youtube’s power and clout. Name me one Youtube alternative….please Ill give you all day and you still wont find an alt. with a better or deeper catalog of videos. Yet Apple foolishly believes they are the dog that wags the tail! Soon reality will hit when they realize Hype and second rate offerings could only take you so far. Because that is when the competition will rise and Apple will be but a distant memory of hubris and hype.